G.R. No.

132848-49 June 26, 2001

PHILROCK, INC., petitioner,

vs.

CONSTRUCTION INDUSTRY ARBITRATION COMMISSION and Spouses VICENTE and

NELIA CID, respondents.

FACTS:

1. On September 14, 1992, the Cid spouses, herein private respondents, filed a Complaint for
damages against Philrock and seven of its officers and engineers with the Regional Trial Court
of Quezon City, Branch 82.

2. On December 7, 1993, the initial trial date, the trial court issued an Order dismissing the case
and referring the same to the CIAC because the Cid spouses and Philrock had filed an
Agreement to Arbitrate with the CIAC.

3. On April 13, 1994, the CIAC issued an Order stating, thus:

x x x the Arbitral Tribunal hereby formally dismisses the above-captioned case for referral
to Branch 82 of the Regional Trial Court, Quezon City where it first originated.

4. The Cid spouses then filed with said Branch of the Regional Trial Court of Quezon City a
Motion To Set Case for Hearing which motion was opposed by Philrock.

5. On June 13, 1995, the trial court declared that it no longer had jurisdiction over the case and
ordered the records of the case to be remanded anew to the CIAC for arbitral proceedings.

6. Philrock avers that the CIAC lost jurisdiction over the arbitration case after both parties had
withdrawn their consent to arbitrate. The June 13, 1995 RTC Order remanding the case to the
CIAC for arbitration was allegedly an invalid mode of referring a case for arbitration.

7. Philrock contends that respondent spouses were negligent in not engaging the services of an
engineer or architect who should oversee their construction, in violation of Section 308 of the
National Building Code. It adds that even if the concrete it delivered was defective, respondent
spouses should bear the loss arising from their illegal operation. In short, it alleges that they
had no cause of action against it.

8. Philrock assails the monetary awards given by the arbitral tribunal for alleged lack of basis in
fact and in law. The solicitor general counters that the basis for petitioner’s assigned errors
with regard to the monetary awards is purely factual and beyond the review of this Court.
Besides, Section 19, EO 1008, expressly provides that monetary awards by the CIAC are final
and unappealable.
ISSUES:

1. Whether or not the CIAC could take jurisdiction over the case of Respondent Cid spouses
against Petitioner Philrock after the case had been dismissed by both the RTC and the CIAC.
2. Whether or not Respondent Cid spouses have a cause of action against Petitioner Philrock.
3. Whether or not the monetary awards were proper.

SUPREM COURT RULING:

1. Section 4 of Executive Order 1008 expressly vests in the CIAC original and exclusive
jurisdiction over disputes arising from or connected with construction contracts entered into by
parties that have agreed to submit their dispute to voluntary arbitration.

It is undisputed that the parties submitted themselves to the jurisdiction of the Commission by
virtue of their Agreement to Arbitrate dated November 24, 1993. Signatories to the Agreement
were Atty. Ismael J. Andres and Perry Y. Uy (president of Philippine Rock Products, Inc.) for
petitioner, and Nelia G. Cid and Atty. Esteban A. Bautista for respondent spouses.

2. Cause of action is defined as an act or omission by which a party violates the right of another.
A complaint is deemed to have stated a cause of action provided it has indicated the following:
(1) the legal right of the plaintiff,
(2) the correlative obligation of the defendant, and
(3) the act or the omission of the defendant in violation of the said legal right.

The cause of action against petitioner was clearly established. Respondents were purchasers of
ready-mix concrete from petitioner. The concrete delivered by the latter turned out to be of
substandard quality. As a result, respondents sustained damages when the structures they built
using such cement developed cracks and honeycombs. Consequently, the construction of their
residence had to be stopped.

3. Awards for Retrofitting Costs, Wasted Unworkable

But Delivered Concrete, and Arbitration Fees
We are unconvinced. Not only did respondents disprove the contention of petitioner; they also
showed that they sustained damages due to the defective concrete it had delivered. These were
items of actual damages they sustained due to its breach of contract.

Moral Damages
We disagree. Respondents were deprived of the comfort and the safety of a house and were
exposed to the agony of witnessing the wastage and the decay of the structure for more than
seven years.
Nominal Damages
Since actual damages have been proven by private respondents for which they were amply
compensated, they are no longer entitled to nominal damages.

Attorney’s fees and costs

The award is not only for attorney’s fees, but also for expenses of litigation. Hence, it does not
matter if respondents represented themselves in court, because it is obvious that they incurred
expenses in pursuing their action before the CIAC, as well as the regular and the appellate
courts. We find no reason to disturb this award.